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Distinction between Event and Transaction

Distinction between Event and Transaction

Distinction between Event and Transaction

Event :

  • The event will be presented to you through your reading of these instructions, including the
    Performance Indicators and Event Situation. You will have up to 30 minutes to review this
    information to determine how you will handle the role-play situation and demonstrate the
    performance indicators of this event. During the preparation period, you may make notes to
    use during the role-play situation.

PERFORMANCE INDICATORS

1. Discuss the nature of depreciation.
2. Journalize business transactions.
3. Prepare depreciation schedules.
4. Determine the book value of a plant asset.
5. Record the disposition of assets

  • Each and every event is not measured in terms of money.
  • an event may or may not result in exchange or transfer  of benefits or value.
  • an event may or may not involve two parties.
  • A non monetary event does not bring about a change in the financial condition of a business.
  • Non Monetary events are nor recorded in the books of accounts of a business.Only monetary events are recorded.
  • A monetary events may involve a single economic activitiy or a series of activities eg the annual functions of a club.

Example

The second project relates to a box truck that was purchased for the maintenance department. The truck was originally purchased on January 1, 2009 at a cost of Rs.45,000. The university has depreciated the truck using the straight line method for a 5-year useful life and a  Rs.5,000 salvage value. The controller has asked that you journalize the adjusting entry for annual depreciation in 2012. The controller has also asked that you calculate the book value of the truck as of December 31, 2012 and again at the end of its useful life.

Transaction

Accounting process begins with the origin of business transactions and it is followed by analysis of such transactions. A business transaction is a transaction, which involves exchange of values between two parties.Every transaction involves Give and Take aspect. The debit represents Take aspect and credit represents the Give aspect in a transaction. For example, when a computer is purchased for office use for cash, then the delivery of computer represents Take aspect and payment of cash represents Give aspect. Thus , business transactions are exchange of goods or services
between two parties and effects of these transactions are recorded in two accounts.

  • Each and every transaction is measurable in terms of money
  • An external transaction results is exchange of benefits or value.
  • An external transaction always involve two parties.
  • A  transaction necessarily cause a change in the financial condition of a business.
  • All Transaction are recorded in the books of accounts of a business.
  • A transaction involves only one economic activities.

Example of Events

  • Receiving a price list from supplier of goods.
  • Placing an order with a supplier of goods.
  • Appointment or dismissal of an assistant.
  • sending a price list to an prospective customer or receiving an order from him.
  • depreciation on assets

Example of an transaction

  • Purchase of goods for cash

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